September 23, 2014
By Mary Perez at Sun Herald
BILOXI -- A last-ditch effort to save more than 300 jobs and keep Margaritaville Casino Biloxi open failed Sept. 15 when landlord of the property on which the casino sits reportedly rejected a $13 million offer to buy the land.
"The property is appraised for $13 million," said Michael Cavanaugh, attorney for MVB Holding LLC, the company that operated the casino on Fifth Street.
That was the amount an established but unnamed casino company offered Clay Point Property, a company owned by the Sim family of Hattiesburg, to buy the land outright, he said. Closing on the deal was to be within 60 days.
Clay Point Property is one of the entities that make up Clay Point LLC -- along with Biloxi, Harrison County, Gulf Central Seafood and T. Mothers Development Companies, which own the land surrounding the casino. Only Clay Point Property was offered the $13 million.
The negotiations were in progress Sept. 13, with customers and employees unaware of the drama unfolding. But when the landlord shot down the offer, MVB and Margaritaville General Manager Doug Shipley settled a lawsuit against them with Golden Nugget Casino and closed the doors at 10 p.m.
"The same day the owners turned down $13 million cash," Cavanaugh said.
Donald Dornan Jr., an attorney for all the landlords operating as Clay Point LLC, declined to comment other than to say the landlords signed a confidentiality request made by MVB during the negotiations. "The Clay Point property owners are obligated to honor that request," he said.
MVB filed bankruptcy Sept. 16, the day after closing. What happens to the casino building could be determined in U.S. Bankruptcy Court at 1 p.m. Thursday during a hearing at the federal courthouse in Jackson.
Late Monday, Clay Point LLC filed a motion asking the bankruptcy court to force MVB to comply with the terms of the lease or abandon the building.
Clay Point LLC claims in the filing MVB owes $4 million in rent and $825,000 in taxes, and has little or no equity to pay the landlords.
Cavanaugh disputes the claims and said Margaritaville paid the landlords $250,000 before construction began.
The casino opened in May 2012 and the property owners agreed to defer the first year's rent of $1 million.
When the business was struggling a year later, he said, Clay Point Property came to MVB with a lease modification to write off the accrued rent and give an 18-month holiday from paying rent. Clay Point Property was to be paid $300,000 after ground was broken for a hotel.
The hotel, which MVB said was necessary for the company to be profitable, was never built.
Instead, Shipley and MVB signed papers Sept. 15 settling a February 2013 lawsuit with Golden Nugget Casino. The lawsuit alleged Shipley breached his employment agreement by stealing trade secrets and using confidential information when he left Golden Nugget and became Margaritaville's general manager.
"The terms of the settlement are confidential and the parties will have no further comment," MVB said in an email to the Sun Herald.
Landry's, the parent company of the Golden Nugget, was seeking compensatory and punitive damages along with attorney fees from Margaritaville, Shipley and another person who did not sign the settlement.
With the fate of Margaritaville in the hands of the Bankruptcy Court, Robert Byrd, the bankruptcy attorney for MVB, has arranged for companies that leased slot machines to Margaritaville to begin removing them.
In a filing with the bankruptcy court, Byrd said the Mississippi Gaming Commission is allowing slot machine manufacturer Multimedia to remove 13 machines, WMS to remove 11 games and Bally Gaming to remove 28 games. Applications to transfer progressive slot machines will be made at a later date, the filing said. Rex Distributing reclaimed beer according to rules of Mississippi Alcohol Beverage Control Commission, the filing said, and perishable food was donated to Salvation Army and Loaves & Fishes.
Notices of bankruptcy were sent to the Internal Revenue Service and 170 businesses and organizations with the message, "You may be a creditor of the debtor."
A meeting of creditors is set for 10:30 a.m. Nov. 14 in Room 920 of the Hancock Bank Building, 2510 14th St., Gulfport.